June 24, 1948

INCOME TAX

CANADA-NEW ZEALAND INCOME TAX AGREEMENT


act, 1948 Hon. J. J. McCANN (Minister of National Revenue) moved for leave to introduce Bill No. 395, respecting an income tax agreement between Canada and New Zealand, signed at Ottawa, in Canada, on the twelfth day of March, 1948.


CCF

Angus MacInnis

Co-operative Commonwealth Federation (C.C.F.)

Mr. MacINNIS:

Explain.

Topic:   INCOME TAX
Subtopic:   CANADA-NEW ZEALAND INCOME TAX AGREEMENT
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LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCANN:

Mr. Speaker, an agreement has been signed between New Zealand and Canada in reference to taxation. The purpose of the agreement is to avoid, where possible, the double imposition of income and similar taxes where Canadians are carrying on business in New Zealand or otherwise receiving income from New Zealand' sources, and where New Zealanders are carrying on business in Canada or otherwise receiving income from Canadian sources. It also provides that the taxation authorities of the two countries may exchange information which may be necessary to make the agreement effective and to prevent fraud and avoidance of taxes which are subject to the agreement.

The purpose of the bill is to give the agreement the force of law in Canada, and it provides that in the case of inconsistency between the agreement and the operation of any other law, the agreement will prevail to the extent of such inconsistency.

The Minister of National Revenue is given the authority to make orders and regulations to carry out the provisions of the agreement, which orders and regulations shall be published' in the Canada Gazette and laid before parliament.

Motion agreed to and bill read the first time. FOREIGN EXCHANGE CONTROL ACT

Topic:   INCOME TAX
Subtopic:   CANADA-NEW ZEALAND INCOME TAX AGREEMENT
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TRANSACTIONS BY CANADIAN RESIDENTS, IN CANADA OR ELSEWHERE


Hon. DOUGLAS ABBOTT (Minister of Finance) moved for leave to introduce Bill No. 396, to amend the Foreign Exchange Control Act.


?

Some hon. MEMBERS:

Explain.

Topic:   TRANSACTIONS BY CANADIAN RESIDENTS, IN CANADA OR ELSEWHERE
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

Mr. Speaker, the purpose of this bill is to close what appears to be a sort of loophole in the Foreign Exchange Control Act. When the Foreign Exchange Control Act was enacted the intention was that its provisions should have extraterritorial effect in so far as they relate to transactions by Canadian residents. In other words it was intended, and is indeed essential to the proper operation of exchange control, that certain transactions by Canadian residents should be subject to control whether those transactions are entered into in Canada or elsewhere. In most of the relevant sections of the act, this intention w-as made clear by the use of the words "either in Canada or elsewhere", but through an oversight these words were omitted from sections 21, 22 and 23.

The omission in the case of sections 21 and 22 has recently been disclosed by a decision of a magistrate in Toronto in a prosecution against a Canadian resident for failing to sell to the foreign exchange control board through his bank about $15,000 in United States funds and disposing of them without a permit. The evidence established that the resident was personally in possession of these funds in Niagara Falls, New York, where he used them to buy certain goods which were subsequently smuggled into Canada. The magistrate held in effect that sections 21 and 22 of the Foreign Exchange Control Act did not apply, since the receipt and disposition of the funds took place entirely outside of Canada while the resident himself was outside of Canada.

The effect of this decision-I may say that an appeal has been taken-if maintained, is that any Canadian resident who obtains payment of United States funds while in the United States could dispose of the funds there without committing an offence. This would, of course, defeat one of the primary purposes of the Foreign Exchange Control Act, which is to ensure that United States dollars and other foreign exchange earned by Canadian residents from exports, services rendered for non-residents and from other sources must be sold to the foreign exchange control board where they will be available to meet Canada's foreign expenditures.

Because of the serious consequences which might follow as a result of the apparent defects in sections 21, 22 and 23 the government feels it necessary to ask now for the amendments contained in the bill. They are purely

Questions

of a technical nature, and merely will enable those sections to be applied as originally intended.

Topic:   TRANSACTIONS BY CANADIAN RESIDENTS, IN CANADA OR ELSEWHERE
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LIB

James Horace King (Speaker of the Senate)

Liberal

Mr. SPEAKER:

Is it the pleasure of the house that the minister shall have leave to introduce said bill?

Topic:   TRANSACTIONS BY CANADIAN RESIDENTS, IN CANADA OR ELSEWHERE
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PC

Edmund Davie Fulton

Progressive Conservative

Mr. FULTON:

On division.

Motion agreed to on division and bill read the first time.

Topic:   TRANSACTIONS BY CANADIAN RESIDENTS, IN CANADA OR ELSEWHERE
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EMERGENCY EXCHANGE CONSERVATION

AMENDMENT OF SCHEDULES TO ACT OF 1947-48

LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Hon. DOUGLAS ABBOTT (Minister of Finance):

Mr. Speaker, in Votes and Proceedings of yesterday appears notice of a bill in my name to amend the Emergency Exchange Conservation Act, which was referred to by the Minister of Public Works (Mr. Fournier) a few days ago as one of the bills that the government intended to bring down. I had expected it to be on the order paper today for introduction, but, apparently through some mistake either in my office or in the law clerk's office, it was one day behind the other bill which has just been given first reading. If the house would give unanimous consent, I would like to advance it one stage in order that the bill may be distributed to members and put on the order paper for discussion at whatever time the house sees fit.

Topic:   EMERGENCY EXCHANGE CONSERVATION
Subtopic:   AMENDMENT OF SCHEDULES TO ACT OF 1947-48
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PC

John Bracken (Leader of the Official Opposition)

Progressive Conservative

Mr. BRACKEN:

On behalf of my associates, Mr. Speaker, may I say that we offer no objection to proceeding with the first stage of the measure now.

Topic:   EMERGENCY EXCHANGE CONSERVATION
Subtopic:   AMENDMENT OF SCHEDULES TO ACT OF 1947-48
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LIB

James Horace King (Speaker of the Senate)

Liberal

Mr. SPEAKER:

By unanimous consent.

Mr. ABBOTT moved for leave to introduce Bill No. 397, to amend the Emergency Exchange Conservation Act.

Motion agreed to and bill read the first time.

Topic:   EMERGENCY EXCHANGE CONSERVATION
Subtopic:   AMENDMENT OF SCHEDULES TO ACT OF 1947-48
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QUESTIONS


(Questions answered orally are indicated by an asterisk).


IMPORT RESTRICTIONS-PICTORIAL POSTCARDS, ETC.

PC

Mr. ROSS (St. Paul's):

Progressive Conservative

1. Have any permits been issued for the importation into Canada from Great Britain of any pictorial postcards, greeting cards, or similar artistic cards or folders, finished or unfinished, or any Christmas seals, stickers, tags and enclosure cards, printed, embossed or otherwise decorated, which articles come under the prohibited list, schedule I of Bill No. 3?

2. If so, to what company, partnership, person or persons have these permits been issued?

3. What was the reason for their issuance?

>

4. What condition of exceptional hardship would result if the permits had not been issued?

5. What is the nature of the permits?

6. For what types and quantities of the above articles have permits been granted?

7. What is the approximate value of the articles under the permits so granted?

Topic:   QUESTIONS
Subtopic:   IMPORT RESTRICTIONS-PICTORIAL POSTCARDS, ETC.
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June 24, 1948